Integrated finance, the next big thing: the summit

VIETNAM, September 26 –

Bồ Xuân Hiệp

HCM CITY – Embedded finance is the next big thing in the financial services industry as it has seamlessly integrated into the local fintech landscape in recent years, experts said at a meeting last Friday in HCM City.

Speaking at the Integrated Finance Summit, Jinchang Lai, Senior Director of Operations of the Financial Institutions Group in Asia and the Pacific, International Finance Corporation (World Bank), said that the future of the financial services industry will be finance. integrated.

Integrated finance has gradually taken hold in Việt Nam, he said, adding that it is the new normal for modern businesses, regardless of the sector.

Integrated finance occurs when a non-financial website or app, such as a ride-sharing company or retailer, integrates a financial service, allowing customers to access financial services anytime, anywhere.

An example is an online store offering short-term loans in the form of Buy Now Pay Later (BNPL), or digital wallets on phones that allow instant contactless payments.

“But this is just the beginning,” he noted.

Experts said that integrated finance has already begun to simplify financial processes in consumer and business commerce by lowering entry barriers for various products and services.

In-app payments, in particular, will make shopping easier for consumers and businesses by enabling instant payments at the touch of a button.

Common examples of embedded financing include embedded loans and embedded insurance, among others.

Nguyễn Viết Châu, chief innovation officer at MBBank, said that as more companies and ecosystems integrate financial services into their offerings, banks should take this opportunity to decide what role they will play in this model. .

“For example, when payment technology is integrated into the infrastructure of an e-commerce site or app, shoppers don’t have to enter their credit card details for every transaction.

“By partnering with ride-sharing app Grab, a bank can use in-app payments, so customers don’t have to whip out their credit card or rush for cash, but pay automatically via the app at the end of their trip,” he said. said.

In Việt Nam, local businesses are making the most of the country’s adoption of technology and its open attitude to innovation, resulting in a high rate of technological breakthrough.

Recent data shows that Việt Nam is one of the countries with the lowest credit card penetration in Southeast Asia, along with Indonesia and the Philippines, with only 4.1% of the population owning a card credit.

Additionally, credit deficit and lack of knowledge about digital payments is a challenge in Việt Nam, resulting in the majority of transactions being done in cash.

Experts said this had created a huge void in the market that banks were simply unable to fill, creating room for the development of integrated finance.

game changer

Experts said integrated finance could be a game-changer for non-financial businesses.

With integrated finance, customers would no longer need to stop at the bank to access their money. In some cases, integrated finance could eliminate traditional banking.

Businesses could also send money to family members overseas, pay overseas suppliers, and purchase insurance and other services needed to run a business without using a card.

According to Makoto Tominaga, CEO of Credify, integrated finance comes in the context of the big data boom that we are at the beginning of. Taking advantage of the data boom is vital in today’s financial environment.

“Data is like crude oil. It’s valuable, but if it’s not refined it can’t be used, so data needs to be broken down and analyzed for it to have value,” he said. he declares.

According to the Việt Nam Embedded Finance Markets Report 2022, the integrated finance sector in Việt Nam is expected to grow by 66.3% on an annual basis to reach $336.4 million this year.

Việt Nam has set itself the goal of becoming a digital country by 2030, with its digital transformation expected to fuel the integrated finance market in the coming years.

Oracle estimates that the value of the integrated finance market is expected to exceed $7 trillion over the next decade, making it twice the combined value of the world’s 30 largest banks today.

Organized by Credify and sponsored by the Việt Nam Digital Communications Association, the annual summit attracted more than 300 experts from the finance, banking, insurance, e-commerce, retail and healthcare sectors. . —VNS

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